Industry Growth Program: discussion paper

Geelong Manufacturing Council
INDUSTRY GROWTH PROGRAM CONSULTATION SUBMISSION
August 2023

Consultaon Paper
GMC responses to quesons asked in the paper:

Eligibility of SMEs Quesons:
• What objecve criteria should determine eligible innovave SMEs? For example, annual turnover of $20
million or less, employee cap and/or net asset cap?

o A $20m cap is too low. This would exclude medium-sized Australian businesses developing new to
world products or looking to reach completely new markets.
o The ATO definion of a medium-sized business is turnover of up to $250m. This is more in line with
the European definion. Australian businesses must be able to compete at the global scale to be
successful, and our government programs should align to support this.
o Experience in Australia shows that medium-sized companies, despite their comparave size, are not
always able to sustain the level of risk involved in commercialising innovave products.
o These organisaons oen have a beter chance of success due to their business and market
experience, and yet encounter similar difficules as their smaller counterparts in accessing the
venture support. Many are looking to expand into high-risk sectors with high potenal, and without
increased local support are at risk of moving offshore.
o With Government support, medium-sized companies can withstand some of this pressure and take
Australian innovaon to global markets.
o An upper limit of at least $100m for the Industry Growth Program would enable established
businesses looking to pivot or enter new markets (via innovave product development) to parcipate
and therefore grow opportunies for Australia. These organisaons will oen have the established
team and business know-how required for success (see “De-risking” below).

• What level of grant matching is appropriate? Should there be a variaon for earlier stage Technology
Readiness Levels (TRLs) programs and the size of the grant?

o $1 applicant : $2 IGP for projects with a higher likelihood of success (ie de-risked with confirmed
market/buyer, experienced team in place, above TRL 6 & potenally investment confirmed).
o Projects with a clearly defined market & value proposion, but at earlier stage TRL and/or with an
inexperienced team present a higher risk, therefore $1 : $1 may be more appropriate.
o As menoned, TRLs should not be considered in isolaon.

Eligibility of projects Quesons:
• Are there barriers beyond pre-profit stage that the program should consider supporng?

o No. It’s important not to duplicate work being done by various accelerator and incubator programs.
Re-direcon of relevant enquiries and applicaons to these exisng programs is appropriate.
o The “risk of success” needs to be considered in the commercialisaon of a product. In other words,
dequate supports should be provided to ensure parcipang businesses can meet market demand in
the event of a sharp increase in demand. Suggested fast-track access to low interest loans in order to
meet this inial demand. This may be the point at which an organisaon is ready to access Naonal
Reconstrucon Fund.

Geelong Manufacturing Council IGP Consultaon Submission.docx Page 1 of 5
• Should Technology Readiness Levels (TRLs) be used to determine eligibility of a project? If so, what are
appropriate TRLs for commercialisaon and/or early-stage growth phases?

o TRLs are not relevant criteria in isolaon. While these are good indicators of the technical progress of
a project, they give limited indicaon as to whether there is a market/buyer for a product. A clearly
established value proposion and a solid business case for the project provide a clearer indicaon
of likely successful commercialisaon.
o Projects at below TRL6 should be directed to exisng programs (R&D programs, incubators &
accelerators).
o Project success is more likely in an SME that has already successfully commercialised. Four main areas
should be considered with weighng towards projects that have:
 Backing from an experienced team
 A well-arculated and evidenced market and value proposion
 Backing from a confirmed buyer (such as via equity, order, leter of support, etc, etc)
 A developed prototype (TRL6+)

• How should we determine which projects have the most potenal for future growth and market impact?

o The priority areas are well defined and understood. A clear roadmap with end goals for each priority
area should be used to inially idenfy projects. A clear business case by the applicant, with
idenfied/tested markets and growth roadmap should be part of the applicaon process.
o Applicants need to have a demonstrated record of achievement. At least two years, but need a system
for government to reward real talent and bolster (with support) the commercial prowess that is oen
lacking in early stage businesses.
o Rather than supporng many early stage ideas, where 1 in 10 may be successful, greater success
(business growth & IGP success) would be seen through a de-risked model where project applicants
are able to demonstrate a “pull customer” (see above re backing of a confirmed buyer). Broadly, let
the market decide which projects are supported.

• Should it be necessary that the applicant has the legal ownership, or effecve ownership, of the know-how,
intellectual property or other similar results arising from the project?

o Yes. In order to build Australia’s manufacturing capability and IP, and in turn market advantage and
sovereign capability, the Australian-owned applicants should maintain “effecve Australian control”
for a given period of me as a requirement to access funding.
o “Effecve Australian control” could include majority Australian ownership/board; Australian
ownership of IP; profits reinvested in Australia; maintaining a manufacturing presence and
headquarters in Australia, for example. The primary purpose of the criteria should be designed to
ensure that there is no foreign influence, or very litle, on applicants’ decisions with regard to:
 The raising and allocaon of capital;
 The funding and protecon of IP;
 The funding and creaon of R&D; and
 Mergers, acquisions, and disposals.

• Is ‘need for funding’ (i.e. why applicants are unable to access sufficient funding for the project from other
sources) a useful merit criterion for assessing grant applicaons? If so, how should this be measured?

o Yes and no. Reasons for “need for funding” are important indicators on the likelihood of project
success and would be useful in assessing applicaons. Funding should not be provided to projects that
have the means to access support, experse and capital from elsewhere.
o However, support will likely accelerate the commercialisaon of projects that may have a chance of
success in a much longer meframe. These should be given support from the program.

Diversity & Inclusion Quesons:
• What are the potenal barriers to accessing the Industry Growth Program?

o Evidence is clear that diverse organisaons face addional barriers to growth. Female (& other
personal diversies) led, rural & regional based businesses should be given addional consideraons
in their applicaons. Place based/experienced support from advisers and industry partners is crical.
We know that diversity drives greater innovaon and every effort must be made to support a range of
business if the program is to make the greatest impact.

• How can we help overcome these barriers to expand the reach of the program?

o Place-based support is crical. Also, an understanding of the parcular barriers and challenges of
diverse organisaons, and how to overcome them (with a track record of doing the same), will provide
greater likelihood of success.

• Should the program consider more specific merit criteria for tradionally underrepresented groups?
o Criteria for interseconality should be included and weighted. However, a good business case,
demonstrated market and experienced team should all sll be major consideraons when assessing
applicaons.

Industry Partner Quesons:
• What core capabilies and resources would be most useful from industry partner organisaons to improve
commercialisaon and early-stage growth performance for parcipants of this program?

o Industry partner organisaons can provide a trusted and highly regarded network of experse and a
filter for industry advisers and parcipants accessing the IGP. Place-based knowledge, awareness and
support are crical in engaging successfully with applicants.
o Ready access/established relaonships with enabling organisaons e.g. support for markeng,
accounng, HR, engineering, prototyping should be considered.
o Our understanding is that advisers will be the primary providers of support to successful applicants.
An isolated industry adviser may not be as effecve as one who works closely with or who has
structured access to an industry partner organisaon. It is important that industry partners can direct
support to the relevant areas and experse.
o A well-resourced consultave commitee led by an industry partner – incorporang place-based
experse – would be a most useful resource.

• What services and support should industry partner organisaons provide to parcipants?

o Industry partner organisaons should be a trusted partner providing connecon for parcipang
organisaons, and where relevant, input to parcular issues regarding projects. Ideally industry
partners would be a key entry point and potenally a filter, using both place-based approach and an
experse-based approach.
o Effecve collaboraon across the entrepreneurial ecosystem (industry, community, academia &
government), creates extraordinary outcomes – industry partners are the connecng ssue
between each of these organisaons, facilitang the all-important collaboraons.

Program Governance Quesons:
A new committee will be established under the delegation of the Industry Innovation and Science Australia Board to provide program oversight and recommendations on grant assessment to DISR. The committee will have: expertise in commercialisation, SME growth, venture capital and financing early-stage firms; knowledge of NRF priority areas.

• Are there other skills and experse that should be represented on the commitee?

o It is important the commitee also features diverse (interseconal) representaon to meet the
diversity and inclusion goals of the program, including regional experience.
o A global manufacturing perspecve is imperave if the program is to successfully support Australian
manufacturers to compete on the global stage.
o We would like to emphasise the crical importance of extensive commercialisaon experience – and
risk appete - on the new commitee.
o Experienced members will understand that some funded projects may fail. Ulmately these will a
provide valuable learning experiences both for future program parcipants and in refining program
design.
Program Design Quesons:
• What other design elements could be considered to ensure a quality, posive business experience and
outcomes?
o Industry Advisers must have had commercialisaon experience and demonstrated experse in
building capability and business prowess in SMEs.

• Are the proposed project periods (up to 24 months) reasonable?
o A more realisc meframe is 4 years. 24 months is not likely to be long enough for the majority of
projects to reach their potenal.
• How should we measure the success of the Industry Growth Program, for the economy and for parcipang
businesses?
o % change in revenue and/or capital raised (cf forecast)
o % increase in market share/penetraon
o % increase in FTE (cf forecast) – use with cauon
o Export market reach
o Engagement senment (with advisors, industry partners and referred support)
o **It is important to be cognisant of the ability of an IGP engagement to directly impact measurables,
within a wider business context, and the realisc meframes for impact to become evident.

Post Grant Reporng Quesons:
• What informaon would be important to seek during the follow-up (post-grant or post-advice) period?

o Impact of the IGP on the commercialisaon process
 Actual growth cf forecast growth ($/market share/market penetraon)
o Aspects of the IGP that worked well / areas for improvement
o Changes to business plan and/or priories as a result of engaging with the program
o Engagement senment (with advisors, industry partners and referred support)
o Business intent for next 2 years, 5 years? How did IGP influence this?
o **It is important to be cognisant of the ability of an IGP engagement to directly impact measurables,
within a wider business context, and the realisc meframes for impact to become evident.

• Over what meframe should the program follow up with grantees and advise recipients to collect data on their
business?

o Acvies relevant to the program: Quarterly during engagement and then annually for two years
o Outcomes: End of program and then annually for two years
o Two years for program length is a very short period in which to move a concept through to
commercialisaon. A four year program would see much greater success and allow evidence of actual
KPIs (eg growth, market share, etc)

• How can the reporng burden be kept to the minimum required to best support a future evaluaon of the
program?

o See above.
o Smart data collecon and use at key points, designed to eliminate duplicate data collecon and
collecon of unnecessary data. Keep the imposion on businesses small with well designed tools and
good use of data.
o Ensure informaon collected is ulised across program/s evaluaon and where possible linked to
other data already collected to inform a broad, comprehensive and longitudinal picture of
parcipaon program impact compared to ancipated results.

• What other opportunies (including those beyond data) could be explored as part of the post-grant period?
Alignment with Other Iniaves Quesons:
• How can the program complement other university, industry and government iniaves?

o Create a pathway from concept to commercialisaon, with appropriate levels of support and
idenfied ancipated outcomes at each level and a clear guide/support for businesses to ensure they
enter at the correct level.
o Advisors (and other government agencies/support such as AusIndustry) need to understand each level
of support and direct businesses appropriately

• How could the program support beter connecons from industry to universies and entrepreneurial students?

o Internship and/or graduate support
o Allow posive weighng where funding is ulised for university collaboraons.
o It can be difficult for SMEs to navigate university collaboraons, especially in the inial stages. Support
to do this from the program, e.g. via experienced industry partners, would be highly beneficial.

For more informaon please contact:

Jennifer Conley
CEO
Geelong Manufacturing Council
Jennifer.conley@geelongmanufacturingcouncil.com.au
0406 857 856